Momentive Performance may soon seek Chapter 11 bankruptcy protection

By Larry Rulison

Published 11:03 pm, Thursday, April 3, 2014

Momentive Performance Materials Inc. in Waterford, which employs about 900 people, appears headed for a Chapter 11 bankruptcy court filing eight years after being sold by General Electric Co.

The company, which makes silicones and quartz, said in a filing made Tuesday with the U.S. Securities and Exchange Commission that it is discussing with its creditors reducing its debt load, and that the talks "will be concluded shortly."

Momentive has about $3 billion in long-term debt held by bondholders, and its quarterly interest payments are typically much larger than the operating income it can produce. Private equity firm Apollo Global Management paid $3.8 billion in 2006 to acquire the former GE Silicones operation.

Momentive said it expects to post a loss of $465 million for 2013, up from a loss of $365 million in 2012. The company says it has delayed filing its annual report so it can focus on trying to save itself from bankruptcy court.

In the first nine months of 2013, Momentive had $1.7 billion in sales, with operating income – sales minus the cost of doing business — of $34 million.

Interest payments on its debt during that same period totaled $236 million, meaning that its debt service was seven times greater than its operating income.

It is unlikely Momentive workers in Waterford, most of whom are covered by union contracts, would immediately lose their jobs if a bankruptcy case were to occur. But a Chapter 11 bankruptcy restructuring could be unpredictable, depending on bondholder demands.

"In the meantime, Momentive Performance Materials remains focused on operating its plants safely and meeting and exceeding the needs of its customers," company spokesman John Kompa said.

Union officials at the Waterford plant could not immediately be reached for comment.

Kompa said that any restructuring would not involve its sister company, Momentive Specialty Chemicals, which operates separately from Momentive Performance Materials under a holding company.

Just a few days ago, Momentive Performance Materials appointed Jack Boss as the new president of its silicones and quartz business in Waterford.

Boss fills a job previously held by Jack Dandolph, who left the company last August.

It's unclear what happened to push Momentive toward bankruptcy court so suddenly. The company said in November that it had enough cash flow, cash on hand and potential borrowing capacity to pay its debts for 12 months.